Air Travel Industry Analysis

Spend growth in the air travel industry is expected to touch a value of over USD 170 billion between 2018-2023, with spend momentum accelerating at a CAGR of over 3%. This spend growth will be attributed to the robust demand for business travel in emerging economies and an increase in global passenger traffic. Many leading air travel service providers are offering long-haul low-cost air travel services, especially in emerging economies such as Malaysia and Singapore, at low prices to buyers. The market for long-haul low-cost carriers is further expected to grow owing to rising middle-income group, increasing affordability, and growth of the tourism industry in emerging economies such as India, Brazil, and China.

Top Spending Regions in the Air Travel Industry

The introduction and the growing requirement for long-haul flights for business purposes and leisurely air travel will be one of the primary spend accelerators in the air travel industry across the key geographies during the forecast period.

APAC

This region is home to a rapidly growing market for long-haul flights that are witnessing a high demand owing to the increase in the frequency of business and leisure air travel across the countries. The prevalence of a favorable regulatory framework pertaining to the aviation industry will cater to spend growth in the air travel industry in this region during the forecast period.

The United States

Introduction of cost-effective prices for round trips from the US to Asian cities is favoring the outbound air travel services in the US. Increasing demand for charter flights from the corporate sector will also result in an incremental category spend in the region. According to reports, the leading service providers are contemplating to introduce low-cost long-haul flights to widen the access of the middle-class income group. This is expected to accelerate the category growth in the US to a large extent.

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What are the Key Price Trends in this Market?

• A shortage of experienced pilots will compel air travel service providers to increase compensation to hire and retain pilots with the requisite expertise. According to the air travel price trends, this will have a significant impact on the overall price structure in the air travel industry.
   
• Rising MRO costs are expected to be a major cost driver through 2023. The amount spent on repair and maintenance by airlines grew by nearly 15% in 2018 when compared with the previous year. These costs are then passed on to buyers in the form of high fares, which ultimately increases air travel services category prices.
   
• Dynamic pricing is the most widely adopted pricing model in the air travel industry that offers the scopes of procuring tickets at low prices during off-seasons/advance booking.
   

Download the free sample of this report to know what the key air travel procurement best practices that you must adopt to address price dynamism in this market.
 

Insights Offered in this Air Travel Industry Report

• Global and regional spend potential for the air travel industry for the period of 2018-2023
• Supplier relationship management practices in the air travel industry
• Supplier margins and selection criteria in the air travel industry
• Top air travel service providers and their cost structures
• Top air travel service providers in the US and their cost structures
• Air travel industry spend analysis in the US
• Air travel price trends, and forecasts
• Cost drivers influencing the air travel prices

Insights into Air Travel Supply Market
 

• Air travel service providers can reduce employee costs by nearly 5% by limiting the frequency of multiple-day trips. This will curb the expenses associated with overnight stays of pilots and other staff.
   
• Commercial airline service providers have high profit margins owing to their high economies of scale. These service providers also offer bundled services such as booking hotels, local transit, and destination management. This helps them derive higher margins when compared with other chartered service providers.
   
• Aircraft leasing companies derive the highest margins in the industry supply chain. These companies lease aircraft to air travel service providers, with or without crew, ground staff, insurance, and maintenance, based on the demand. They charge depending on the type of lease. Many service providers are increasingly leasing aircraft to avoid the financial burden of buying
  
   

Insights into Some of the Leading Air travel Suppliers

The air travel industry procurement intelligence report has enlisted the top suppliers, best selection criteria, and negotiation strategies for such suppliers. These insights will aid buyers to take a collaborative approach with the air travel suppliers to identify areas where they can optimize their procurement spend. The top air travel suppliers highlighted in this report include:

• American Airlines            
• Delta Air Lines  
• United Airlines 
• Deutsche Lufthansa       
• AIR FRANCE KLM             
• IAG       

Criteria to select suppliers in this dynamic Air travel industry is subject to change based on the day-to-day market outlook. Get a free demo of our procurement platform to gain immediate access into real-time insights to the changing suppliers selection criteria.